How Silicon Valley Bank's collapse could impact its Tempe office space

How Silicon Valley Bank's collapse could impact its Tempe office space

Article Originally Posted by PhoenixBusinessJournal on March 14, 2023

The collapse of Silicon Valley Bank could leave space at a prominent Tempe office park in limbo. 

The Santa Clara, California-based bank has been leasing at Hayden Ferry Lakeside I, right on the Tempe Town Lake waterfront. The bank announced it has been operating at more than 150,000 square feet at the building as of 2019. The website lists that it is working in Suite 101 at 80 E. Rio Salado Pkwy.

The fate of Silicon Valley Bank’s bank branches, its 160,000-square-foot Santa Clara headquarters and its other offices, such as Hayden Ferry Lakeside — will largely depend on whether the Federal Deposit Insurance Corp. can secure a buyer for the California-based bank, according to sister publication San Francisco Business Times.

“When banks were being closed in the 2008 period, the FDIC worked hard to find a buyer, and buyers typically, though not always, would acquire the bank and its real estate,” Michael Wick, a 30-year veteran of the banking industry, told the San Francisco Business Times. “But ultimately it was up to that buyer what they would keep and what they would reject." 

Citing reporting from Bloomberg, the Silicon Valley Business Journal reported private equity giants Apollo Global Management Inc., Blackstone Inc. and KKR & Co. are among the investors who are eyeing the purchase of the failed Santa Clara bank's loan portfolio.

Silicon Valley Bank has had a presence at Hayden Ferry Lakeside I since 2012 and announced subsequent expansions within the building and large hiring goals along the way.

Just over three years ago, Silicon Valley Bank announced it would take the remaining 60,000 square feet across three floors at Hayden Ferry Lakeside I to take full occupancy of the building, totaling 190,000 square feet. The bank had plans to reach 1,000 employees in Tempe in the coming years.

The 203,000-square-foot Hayden Ferry Lakeside I is owned by Atlanta-based real estate investment firm Cousins Properties, CoStar Group Inc. said.

CBRE Group Inc.'s research found the building is fully leased as of earlier this month, of which Silicon Valley Bank had the naming rights. The listing brokers are CBRE's Bryan Taute and Charlie von Arentschildt.

CBRE declined to comment on this story.

How Silicon Valley Bank's closure could impact Tempe submarket

"Overall, the collapse of Silicon Valley Bank could deal another blow to a Tempe submarket that was already facing challenges over the last few quarters," said Connor Devereux, director of market analytics for Phoenix at CoStar Group Inc. in a statement to the Phoenix Business Journal. "High-profile move-outs or downsizings from tech firms including DoorDash, Carvana, OpenDoor, Peloton, and Robinhood, among others, have negatively impacted Tempe property performance."

Over 7 million square feet is currently available for sublease across the Valley representing nearly 4% of the total Phoenix office inventory, CoStar found. About 1.6 million square of that can be found in Tempe, leading the Valley in total sublease availability.

Earlier this month, Achieve — another California-based financial services firm — elected to put up roughly half of its office footprint on the sublease market at nearby Rio 2100. The company pivoted toward a hybrid work model throughout the Covid-19 pandemic, which led to a decision to offload a chunk of its office footprint in Tempe.